BUILDING BACK BETTER
The clarion call is clear: we must “build back better”.
Whatever your views on the latest penchant for three-word catchphrases, there’s no denying that this one resonates widely. Its ambiguity offers something for everyone but one thing above all: hope. Hope that we will choose to be the best version of ourselves and that we will pursue that choice with vigour, determination and relentless focus.
What do I hope for? In truth, so much that it would take forever to list but there is a clear central theme: positive impact, both from business and throughout society as a whole.
I was inspired by a talk from Sir Ronald Cohen at the virtual CogX 2020 conference yesterday afternoon. He reminded me that less than 100 years ago, businesses railed against the transition from measuring return to a measurement of risk and return verified by independent auditors. Many feared that the new approach would spell the beginning of the end for business. 90 years on, we have become so accustomed to measuring risk and return that the opposite is now true – business could not function without it. Indeed, it is doubtful that we would have seen the scale of investment we have enjoyed over that period without the confidence that the more balanced measurement inspires.
More recently we have started to ask ourselves whether that confidence was well-founded. Increasingly, the answer is no – at least, not as well-founded as we would have liked. As our understanding of impact grows, so our confidence erodes. Business is a three-dimensional subject and we realise we have been looking at only a two-dimensional representation of it. In doing so, we created the environment for society and our planet to be pushed to breaking point.
So, what to do about it? Much like 1929, we are at an inflection point. ESG and sustainable, impact investment are gaining traction but remain “alternative” whilst well-funded, powerful influencers argue that a new paradigm that measures and audits risk, return and impact will be too difficult and too subjective, not to mention too costly and burdensome. Many fear it will bring about the end of business as we know it.
And so it must. As the saying goes: “if you’re standing still, you’re going backwards”. Business cannot stand still if we are to “build back better”. We want business to take the lead and evolve with us to deliver a future where profit is generated through positive impact, and vice versa. That is certainly the world I hope for.
It will be easier said than done. Standardising the measurement of impact means quantifying and weighing impacts both intrinsically and relative to one another. It requires consensus on a myriad profoundly complex, inter-connected issues where, thus far, consensus has been all but impossible to achieve. Business cannot address those questions on its own. They affect all of us and we must all get involved. If we are committed to building back better, these challenges must be overcome – we cannot afford to put it off any longer.
For many businesses, measuring and reporting on impact (even voluntarily and subjectively) will be new. Thankfully there are some fantastic examples to follow - DeepGreen and Unilever spring to mind, alongside the British Academy’s work on the “Future of the Corporation” to which I had the privilege of contributing.
If you’re wondering how to incorporate impact as you look to build back better, here are three tips to help you get started:
Impact on purpose – All organisations have a purpose, and all create an impact. Whilst most purposes are positive, many impacts are not. By capturing an objective view of the impacts your organisation has, you will quickly form a perspective on your overall impact and whether that is justified in the context of your purpose. Keep it simple – your objective is to spark debate and generate informed choices.
Make impactful decisions - Build impact into your end-to-end governance. By setting an expectation that impact must be discussed in management reporting and specifically evaluated alongside risk and return as part of business and investment proposals, you create the environment for everyone in your organisation to engage with your impact. There will inevitably be different views on how certain impacts should be treated. Surfacing these without pre-judgment will inform the debate, strengthen engagement and deliver better outcomes overall.
Measure impact - Traditional KPIs measure input and activities, sometimes alongside output. Both play an important role in steering the business towards its goals. Supplement these by measuring impact outcomes; the actual improvement made to lives, the world we live in and the planet we live on. As a measurement it will inevitably be imprecise. What matters now is that you initiate the feedback loop which will drive more impactful decisions so that you can deliver more impact on purpose.
With vigour, determination and relentless focus on impact we can and will build back better.
— Rosolution, June 2020